Deck 20: Economic Growth in Developing Economies

Question 1

Which of the following characteristics is generally representative of developed countries relative to developing countries?

A) a larger percentage of the labor force in rural areas
B) a lower infant mortality rate
C) lower productivity in the agriculture sector
D) a lower rate of literacy

Answer 1

B

Question 2

A majority of the population of the Global South live in ________ and work ________.

A) rural areas; in agriculture
B) urban areas; in factories
C) rural areas; in urban areas
D) urban areas; for the government

Answer 2

A

Question 3

The disparity in child mortality rates between the Global North and the Global South

A) has virtually disappeared.
B) remains very high.
C) has been cut roughly in half in percentage terms.
D) has more than tripled over the past 25 years.

Answer 3

B

Question 4

In 2015, the population of the world

A) was approximately 500 million people.
B) fell below 2 billion people.
C) was more than 7 billion people.
D) was close to 1 trillion people.

Question 5

Data from the United Nations indicate that in 2014, ________ people experienced extreme hunger.

A) 125 million
B) 870 million
C) 5.4 billion
D) almost 10 billion

Question 6

Which of the following characteristics is generally representative of developing countries relative to developed countries?

A) a smaller percentage of the labor force in urban areas
B) a lower infant mortality rate
C) a greater availability of college education
D) a lower rate of illiteracy

Question 7

Over the past 25 years, child mortality has ________ and literacy has ________ in developed countries.

A) risen; risen
B) risen; fallen
C) fallen; fallen
D) fallen; risen

Question 8

Most of the world's nations

A) belong to the developing world.
B) belong to the developed world.
C) have transitioned from the Global North to the Global South.
D) have transitioned from the Global South to the Global North.

Question 9

In the agriculture sectors in the Global South, productivity tends to be ________ because farmers work with ________.

A) low; little capital
B) low; little labor
C) high; large amounts of capital
D) high; large amounts of labor

Question 10

Related to the Economics in Practice on page 384: ________ children under 5 years of age in the world are characterized as extremely short due to malnutrition.

A) 1 in 20
B) 1 in 10
C) 1 in 4
D) 1 in 2

Question 11

Related to the Economics in Practice on page 384: Of the children under 5 years of age in the world who are characterized as extremely short due to malnutrition, one half are in

A) Africa.
B) Asia.
C) South America.
D) Eastern Europe.

Question 12

Which of the following characteristics is generally representative of developing counties relative to developed countries?

A) a higher rate of literacy
B) a larger percentage of the labor force in urban areas
C) a lower infant mortality rate
D) lower productivity in the agricultural sector

Question 13

Literacy rates in the Global South ________ the Global North.

A) have caught up to those in
B) are still significantly lower than those in
C) have surpassed those in
D) are falling even farther behind those in

Question 14

Over the past 25 years, child mortality has ________ and literacy has ________ in developing countries.

A) risen; risen
B) risen; fallen
C) fallen; fallen
D) fallen; risen

Question 15

India is on the World Bank's list of ________ countries and its capital city is one of the top ten centers of commerce in the world.

A) low-income
B) lower middle-income
C) upper middle-income
D) high-income

Question 16

The country with the second-highest GDP in the world, behind only the United States, is

A) China.
B) India.
C) Germany.
D) Russia.

Question 17

From 1990 to 2013, mortality under age 5 has ________ and the literacy rate has ________ in China.

A) increased; decreased
B) decreased; increased
C) increased; increased
D) decreased; decreased

Question 18

Which of the following characteristics is generally representative of developed countries relative to developing nations?

A) a smaller percentage of the population working in agriculture
B) a shorter life expectancy
C) a higher rate of infant mortality
D) a smaller percentage of children enrolled in college

Question 19

The term "Global South" refers to

A) countries in the Southern Hemisphere.
B) the Southern states of the United States.
C) developing countries in Asia, Africa, and Latin America.
D) industrialized countries south of the equator.

Question 20

From 1990 to 2013, mortality under age 5 has ________ and the literacy rate has ________ in India.

A) increased; decreased
B) decreased; increased
C) increased; increased
D) decreased; decreased

Question 21

Compensation sent back to family in the home country by recent emigrants is known as

A) remittances.
B) transaction costs.
C) outsourcing.
D) capital flight.

Question 22

Capital flight refers to the fact that both human and financial capital

A) flow into developing countries to build much needed infrastructure.
B) leave developing countries in search of a higher rate of return.
C) leave developed countries in search of a higher rate of return.
D) flow into developing countries to invest in risk free investments.

Question 23

________ is (are) estimated at approximately $100 billion per year.

A) Remittances sent from developed countries to less developed countries
B) Capital flight from the United States
C) Social overhead capital in the United States
D) The value of brain drain flowing into the United States

Question 24

An economy is not able to develop because of a lack of capital. Which of the following strategies would you suggest this economy pursue?

A) lower interest rates
B) impose quotas on how much capital can be imported from other countries to reduce dependency on foreign capital
C) increase the political stability of the economy
D) nationalize private enterprises because the government sector is not motivated by profit maximization

Question 25

In 2007, remittances from illegal immigrants in the United States to Mexico

A) began to fall because of increased crackdowns on illegal immigration.
B) continued to rise despite increased crackdowns on illegal immigration.
C) began to fall despite a decrease in enforcement of immigration laws.
D) continued to rise because of the decrease in enforcement of immigration laws.

Question 26

A "brain drain" is

A) the tendency of workers in developing countries to reject new technologies.
B) the tendency of talented people in developing countries to get education in developed countries and to stay there after graduation.
C) the impact of poverty on the productivity of workers in developing countries.
D) the impact of malnutrition on education and productivity in developing countries.

Question 27

The Global South provides college educations to a large fraction of their populations.

Question 28

Health and education are two of the lynch pins of economic development.

Question 29

A developing economy is considering restricting the amount of money its citizens can invest abroad. What might the purpose of this restriction be?

A) to increase the dependency of the economy on developed economics
B) to increase capital formation by forcing its citizens to invest in their own country
C) to reduce the nation's trade deficit so that interest rates will be reduced and capital formation will increase
D) to increase the degree of equality in the income distribution

Question 30

Which of the following factors has been suggested as an explanation for the lack of economic growth in many poor nations?

A) insufficient capital formation
B) the supply of human resources is too high
C) inadequate level of resources
D) a lack of dependence on the already developed nations

Question 31

Despite India being on the World Bank's list of low-income countries, its capital city, Mumbai, is one of the top ten centers of commerce in the world.

Question 32

All of the following are factors that limit a poor nation's economic growth except

A) insufficient capital formation.
B) insufficient controls on free trade.
C) lack of entrepreneurial ability.
D) lack of human capital.

Question 33

The lack of capital in developing nations causes

A) labor productivity to remain low.
B) the savings rate to be too high.
C) output to be low in the present but high in the future.
D) consumption rates to be too high.

Question 34

A policy in which a government actively picks industries to support as a base for economic development is known as

A) social policy.
B) first-choice policy.
C) preferential policy.
D) industrial policy.

Question 35

Building roads, power generators, and irrigation systems are projects that are referred to as

A) social overhead capital.
B) human capital.
C) physical capital.
D) financial capital.

Question 36

Farm output per person in the Global South is often barely sufficient to feed a farmer's own family.

Question 37

The vicious-circle-of-poverty hypothesis states that poor countries

A) are unable to save and invest enough to accumulate capital stock that would help them grow.
B) cannot develop because they lack the ability to educate their workers.
C) cannot develop because their economic policies are ineffective.
D) cannot develop because people don't consume due to lack of goods and services.

Question 38

The government's role in a developing country is important during the country's development process for all of the following reasons except

A) building social overhead capital cannot be taken on by the private sector.
B) building infrastructure is a huge project that only the government can undertake.
C) many social projects are associated with the free-rider problem, which minimizes the rate of return to the private sector.
D) the government is the only institution with a vested interest in a country's development.

Question 39

Statistics show that the less developed a country is,

A) the larger is the share of industrial output in its total output.
B) the larger is the share of agricultural output in its total output.
C) the larger is the per capita income.
D) the larger is the GDP.

Question 40

In some African nations, less than half of the adult population are literate.

Question 41

Related to the Economics in Practice on page 390: In areas of Bangladesh where the government has invested in building flood embankments,

A) marriages between cousins has fallen.
B) marriages between cousins has risen.
C) marriages to people from distant villages has fallen.
D) marriage rates in general have risen.

Question 42

One factors that limits a poor nation's economic growth is

A) an overabundance of capital formation.
B) insufficient labor.
C) lack of entrepreneurial ability.
D) increased urbanization.

Question 43

________ refers to the fact that both human and financial capital leave developing countries in search of a higher rate of return.

A) Urbanization
B) Capital flight
C) Outsourcing
D) Divestiture

Question 44

The ________ hypothesis states that poor countries are unable to save and invest enough to accumulate capital stock that would help them grow.

A) vicious-circle-of-poverty
B) equitable investment
C) no-country-left-behind
D) global-redevelopment

Question 45

From 1978 to 2003, the economy of ________ grew on average 9 percent per year, a rate faster than any other country in the world.

A) India
B) China
C) the United States
D) Russia

Question 46

China and India both have rapidly developing economies. Which of the following characteristics is shared by India and China?

A) Both have embraced free-market economies.
B) Property rights are well established in both countries.
C) Both are democratic countries.
D) Both have high literacy rates.

Question 47

Most of China's recent growth has been fueled by ________, and most of India's recent growth has been fueled by ________.

A) manufacturing; services
B) services; manufacturing
C) manufacturing; manufacturing
D) services; services

Question 48

Which agency lends money to countries to help them stabilize their exchange rates?

A) the International Monetary Fund
B) the World Bank
C) the Federal Reserve
D) the Bureau de Change

Question 49

With microfinance, the mechanism of ________ is a way to avoid the problem of imperfect information.

A) requiring no collateral
B) peer lending
C) making only small loans
D) accepting savings deposits

Question 50

The process of developing local industries to manufacture goods to replace imports is known as

A) export promotion.
B) import substitution.
C) export favoritism.
D) import promotion.

Question 51

The practice of lending very small amounts of money, without collateral, and accepting small savings deposits is known as

A) microfinance.
B) capital flight.
C) debt rescheduling.
D) a stabilization program.

Question 52

Which agency lends money to countries to promote their economic development?

A) the International Monetary Fund
B) the Federal Reserve
C) the World Bank
D) the League of Nations

Question 53

Since the end of the 2008-2009 recession, remittances from illegal immigrants in the United States to Mexico

A) continued to fall.
B) began to noticeably decrease.
C) have begun to increase.
D) did not noticeably change.

Question 54

One of the most successful countries in implementing export promotion policies is

A) the United States.
B) Germany.
C) China.
D) Japan.

Question 55

Related to the Economics in Practice on page 387: In Indonesia, children and allies of President Suharto were affiliated with many companies. When Suharto unexpectedly fell ill, the stock prices of these companies dropped significantly, suggesting that

A) these companies thrived under President Suharto despite their connection with Suharto's allies and relatives.
B) later regimes in Indonesia will be more concerned about economic efficiency and less corrupt.
C) President Suharto's removal from power was based not only on illness but also on concern over corruption.
D) investor opinion of many of these firms was based on their connections with President Suharto and not the economic efficiency of those companies.

Question 56

Remittances sent from developed countries are estimated at approximately ________ per year.

A) $2 million
B) $50 million
C) $100 billion
D) $5 trillion

Question 57

The tendency of talented people in developing countries to get education in developed countries and stay there after graduation is called

A) outsourcing.
B) brain drain.
C) financial capital flight.
D) the vicious-circle-of-poverty.

Question 58

The policy in which industrial production is oriented towards foreign consumers is called

A) import substitution.
B) export promotion.
C) export orientation.
D) import promotion.

Question 59

Compared to traditional bank loans, microfinance loans have all of the following characteristics except

A) they are much smaller.
B) they require no collateral.
C) they are made more frequently to women than to men.
D) they have repayments that begin at a much later date.

Question 60

Remittances refer to

A) compensation sent back to family in the home country by recent emigrants.
B) the flight of capital from developing nations to developed nations.
C) the formation of capital due to technological advances.
D) the movement from the agricultural sector to the industrial sector.

Question 61

Insufficient capital formation has been suggested as an explanation for the ________ economic growth in many poor nations.

A) lack of
B) rapid
C) slow and steady
D) continued

Question 62

Microfinance is the practice of lending ________ , with no collateral, and accepting ________ savings deposits.

A) very small amounts of money; small
B) foreign currency; foreign currency as
C) money electronically; electronic
D) government-backed funds; government securities as

Question 63

A policy in which ________ actively pick(s) industries to support as a base for economic development is known as industrial policy.

A) microfinanciers
B) the World Bank
C) the International Monetary Fund
D) a government

Question 64

Import substitution is the process of developing local industries to manufacture goods to

A) replace imports.
B) import.
C) replace exports.
D) export.

Question 65

From 1978 to 2003, China grew on average ________ percent per year, a rate faster than any other country in the world.

A) 4
B) 9
C) 25
D) 75

Question 66

With microfinance, the mechanism of peer lending is a way to avoid the problem of

A) capital flight.
B) imperfect information.
C) the tragedy of the commons.
D) a double coincidence of wants.

Question 67

Which of the following characteristics is shared by India and China?

A) Both are typically labeled as developing countries.
B) Both have increasing birth rates.
C) Both are politically authoritarian.
D) Both have low life-expectancy rates.

Question 68

The ________ capital in developing nations causes labor productivity to remain low.

A) lack of
B) subsidized
C) reassignment of
D) increase in privately controlled

Question 69

Building infrastructure is referred to as

A) human capital.
B) physical capital.
C) social overhead capital.
D) financial capital.

Question 70

The World Bank lends money to countries to

A) finance their international transactions.
B) stabilize their exchange rates.
C) promote their economic development.
D) fund wars against dictatorial regimes.

Question 71

Related to the Economics in Practice on p. 390: When the government of Bangladesh built flood embankments on the sides of rivers, this represented an investment in

A) social overhead capital.
B) human capital.
C) financial capital.
D) intangible capital.

Question 72

Related to the Economics in Practice on p. 387: According to the World Bank, of the following countries, which one has the lowest controls on corruption?

A) Germany
B) India
C) China
D) Nigeria

Question 73

Compared to traditional bank loans, microfinance loans

A) are much larger.
B) require collateral.
C) are made more frequently to women than to men.
D) have repayments that begin at a much later date.

Question 74

Export promotion is the policy in which industrial production is oriented towards

A) foreign producers.
B) foreign consumers.
C) domestic consumers.
D) both A and B

Question 75

If a developing economy ________ the amount of money its citizens can invest abroad, it has ________ chance of increasing capital formation by forcing its citizens to invest in their own country.

A) restricts; a lesser
B) restricts; a greater
C) restricts; no
D) increases; a greater

Question 76

The International Monetary Fund lends money to countries to

A) finance their international transactions.
B) stabilize their exchange rates.
C) promote their economic development.
D) Both A and B are correct.

Question 77

China's approach to market development has been

A) pragmatic and gradual.
B) nonexistent.
C) inefficient and intermittent.
D) unrealistic and uneven.

Question 78

________ implementing export promotion policies is Japan.

A) One of the most successful countries in
B) One of the least successful countries in
C) The only developed country that has banned
D) The only developed country that has been successful in

Question 79

The government's role in a developing country is important during the country's development process because building social overhead capital

A) cannot be taken on by the private sector.
B) can only be financed by the private sector.
C) requires a joint venture between the public and private sectors.
D) can only be achieved in a developing country.

Question 80

Statistics show that the ________ a country is, the ________ is the share of agricultural output in its total output.

A) more developed; larger
B) more developed; smaller
C) less populated; smaller
D) more populated; smaller